Should I use DIY tax software or ask a CPA for help with my taxes?

A fairytale about tax preparation

Once upon a time there was a lovely newlywed couple who called our office looking for help with their taxes. One of the spouses was very excited not to be responsible for a stack of IRS forms. The other spouse was, we’ll say, “less than excited” to be chatting with a CPA. Spouse #2, who shall remain nameless, had always used a DIY tax prep software service and was very proud of the money they had saved by not paying a professional… until the friendly CPA reviewed last year’s tax return. The CPA discovered (and, of course, shared with the newlyweds in the most friendly, educational, non-condemning manner) that they could have saved over $1,000 on the taxes they paid to the IRS last year.


How to decide between DIY tax software or CPA?

Do my taxes for free?

DIY or self-prep tax software promises cost-efficient returns – even offering to do some of the simplest returns for free. Who can beat that offer? Well, if you’re a first time filer or a college student with minimal income, maybe no one. Software can absolutely help you compute and file your taxes if you have a basic return (in IRS terms, a 1040EZ or 1040A).

What if life gets more interesting?

The older and more “grown up” you become, say with a job, kids or a house, the more interesting and complicated your taxes become. Even the very best software, which is not free, can only report the historical information that you enter in each category. An experienced CPA will report your information and help you make sense of the tax forms you received for the year, but they will also ask about things you might have forgotten. The human touch means someone is going to sit down with you and talk through your income and your deductions.

Humans care and give personal advice.

Some things that go on your tax return, like the income on your W-2, are black and white. There are other expenses and life events that are not as clear. If you received a 1099, where does it go on your return and what expenses are you allowed to deduct? Will tax software give advice on if you should increase your withholding? Can it offer suggestions on the pros and cons of an early IRA withdrawal? Has software ever advised a taxpayer on what actions could be taken to defer recognition of income? Or, maybe more importantly, when that income recognition should be deferred?

What does your future look like?

Smart tax planning looks at your personal situation as well as your short and long term goals.CLICK TO TWEET

For most people, as they progress in their career, their income grows. Your expectation of that growth should include smart tax planning. Smart tax planning is an art form that looks not only at your tax return for this year, but at your personal situation as well as your short and long term goals. You deserve to talk with a live human being who has your best interest in mind. Our accountants LIKE talking to people!

What’s the bottom line?

It is lawful and important to pay all the taxes you owe. However, it’s also lawful and your right to make proper use of every tax break afforded to you by the beloved Internal Revenue Service Tax Code. While tax software can help you record a previous year’s transactions, it does not teach or offer wise counsel. A dedicated accountant will help you learn about your life, your work, and options to proactively minimize your tax liability. Software will record your past, but a diligent accountant will help plan your future.

If you think it might be time to graduate from DIY tax prep, let’s talk. We know it may sound scary to call a CPA, but no blog can answer every individual situation. We’d be happy to chat and to help guide you in the right direction with a free, new client phone consultation.

A fairytale ending

After meeting with the CPA, the newlyweds filed their taxes for this year AND an amended return for last year, received a nice refund and, as in any good fairytale, they all lived happily ever after. The End.